Summary
➡ The article discusses the fluctuating value of Bitcoin, noting that despite its volatility, the overall trend shows growth. It introduces Metcalfe’s law, which states that the value of a network increases with the number of its users, and applies this to Bitcoin’s growing network. The article also mentions the concept of market disruption, comparing Bitcoin’s potential to disrupt financial markets to how Uber disrupted the taxi industry. Finally, it suggests that Bitcoin could reach a value of $1 million per unit by 2030, according to predictions by Fidelity, a large asset management company.
➡ Bitcoin is not just a payment method, but a valuable asset like gold or oil, with potential to disrupt various industries. It’s seen as a store of wealth, like gold, art, stocks, real estate, and bonds, which together are worth around $900 trillion. If Bitcoin captures even a small percentage of these markets, its value could reach $200 trillion, or $10 million per Bitcoin. However, this depends on factors like inflation and global liquidity, which are increasing and could further boost Bitcoin’s value.
➡ The U.S. government predicts that debt levels will rise until 2050, which could increase the value of Bitcoin due to its scarcity and Federal Reserve policies. This trend suggests that holding onto assets like Bitcoin, similar to how successful individuals like former Microsoft CEO Ballmer held onto his stock, could lead to significant wealth. The author suggests planning for future valuations and holding onto assets for long-term success, using Bitcoin as an example.
Transcript
And by the end, you’re going to have the tools to make an informed decision and take control of your future with bitcoin, if you want. Now, whether you’re a seasoned investor or you’re just starting out, this knowledge could be a game changer for your financial journey, not just with bitcoin, but any other asset. All right, now, real quick, if you’re new to the channel, my name is Mark Mosse, and I actually started this channel to talk about bitcoin and cryptocurrency back in 2018, although we talk a lot more about macroeconomic related topics and things like that today.
Now, I’ve been an entrepreneur and an investor for over two decades now. I’ve sold multiple companies. I’ve been investing in early stage companies, venture capital, for over a decade. And now I run a VC focused fund. And I’m going to be going through many of the valuation tools that we use in the fund to show you how to look at this. All right, so let’s jump in. All right, now, we’re gonna talk about bitcoin’s future potential, bitcoin’s future performance. But before we get into that, I wanna let you know why this is so important now. Doesn’t matter if it’s bitcoin, copper, uranium, doesn’t matter if it’s Tesla, Apple, whatever.
Never make an investment unless you know what you’re expecting to do. So, what am I talking about? One, I need to know, what am I expecting? How high do I think it could go over? What timeframe? And what is my exit strategy for that? Again, doesn’t matter if it’s a venture capital company, like I said, a commodity, bitcoin, whatever. So how high do I think it’s gonna go over? What timeframe and how do I plan to exit? So, for example, I’m gonna hold Amazon in 1999, because I think Amazon one day will become the largest e commerce platform out there.
And I think one day the stock could be worth whatever, $1,000, even though I bought it for five. But what I want to do is I’m going to sell 50% when it gets to 100, and then I’m going to sell another 50% when it gets to 500. So I need to know, what am I expecting for it to go up and what is my plan, how long and how do I plan to exit. Now, I also want to know how high I think it’s going to go up and also what the downside is. So I can figure out what my risk adjusted strategy is.
So, for example, if I think it, if I bought it for $10 and I think go to 1000 or it could go to zero, then I have 100 x on the upside and a one x on the downside. I like those odds. Those are pretty good, right? And so we want to be thinking about asymmetric gains. How much can I make and how much could I lose with bitcoin? Possibly you could lose it all probability, though I don’t think that’s going to happen. Maybe you lose 50%. So maybe I had loose 50% to the downside. But what is my upside and then what is my plan? So no matter what you’re buying, you need to understand this.
So even if you don’t like bitcoin, even if you want to go find a different asset, the next bitcoin, whatever, use this same strategy again. This is what I use in my funds. This is what I’ve used as a venture capital investor. And so this is going to help you. Okay? So we’re going to break this down three different types of valuation metrics. Now, in my fund, the way I’ve been doing it, we use a venture cap method. We’re going to break into that. But we’re also going to look at bitcoin and using what’s called Metcalf’s law, and we’re going to look at it from an inflation adjusted way.
Okay? So we’re going to look at it from three different angles to try to get some numbers to understand this a little bit better. Now, before we go into the future, we want to go back to the past. Why? Well, as we stay in investing, that past performance is no guarantee of the future. However, it is important. Right. And so anytime you listen to anyone talking about financial markets, investing, et cetera, you’re going to hear the s and P 500 has done this over past history. In 1960 is what the markets did in 1940. Right? So we’re always looking at the past to try to get a model, even though it’s not necessarily the same.
Sort of like, you know, I burned my hand on the stove, and if I touch a hot stove again, I’ll get burned. But maybe it’s my elbow or my arm next time, right? So it’s not always the same, but we do want to understand the past, so we can start to understand the future. Now with bitcoin, we know, and I’m sure you know by this point, even if you think it’s the stupidest thing in the world, it has been the best performing asset. That’s fact. There’s nothing been better. And over the last 14 years, we can see that bitcoin has averaged a 233% compounded annual growth rate.
So it’s compounding, it’s earning on top of the earning 233% compounded undergrowth rate. Now, that’s been the last 14 years. Of course, the first couple years were absolutely insane with the gross. Now, to put this in comparison, gold has done 4%. So bitcoin’s done 233. Gold did four. The S and P 500 did eleven. Now, over that 14 year period, cherry picking dates, I get it right. Now, this is a big number, because these first few years were insane amounts of growth. It has slowed down. So we can see this chart right here. This shows the black line is the bitcoin price.
And you can see that it’s been going up. But this gold line that we have right here is the compound annual growth rate, and it has been going down. So as the asset gets bigger, as we have more daily trading volume, the volatility gets compressed. So, bitcoin was extremely volatile here. It went up really fast. It also went down really fast. And it’s going up slower and it’s going down slower at the same time that’s getting compressed. And we can see that right here. So it’s been 233% over the last 14 years. We’re now at about 100, 150% on the last four years.
Depends on what timeframe you want to measure it. But I think that’s a better way to look at it. Again, that’s the past. Now, we also look at it like this. And what we can see, if you follow my content on a regular basis. You know, I talk about liquidity drive markets. We’re going to come back to that. And we talked about how liquidity is synced up on like a four year cycle that just so happens to overlap with the four year presidential cycle. And it overlaps with what’s called the four year bitcoin halving cycle. So all three of those are in sync.
We’ll do another video on that. It’ll be linked down below. But we can see with bitcoin, we have these, like, green years. So these are the good years when it went up, up, up, and then we have a red year where it went down, and then we have three green years, went up, up, up, and then we have a red year where it went down. Three good years and then a red year where it went down. And that’s because of this halving cycle that happens. And it’s been continuing this pattern. Now, it’s important to understand this pattern, to project out our game plan of how we want to hold, if we want to liquidate some or whatever we want to do.
We also know that bitcoin’s passed. We want to look at assets based off of something called a sharpe ratio or how volatile it is. Because volatility can really kill your returns. You have to be managing for that. We can see that over this period, over the past five years, bitcoin right here in green, is at 75, which is right around large cap stocks, just slightly below gold. Again, just looking at bitcoin’s past so we can project out in the future. We understand what’s happening, specifically these four year cycles. This kind of gives us an idea of this chart.
So I know it’s too volatile, right? So it goes way up, and then it comes down. And then it goes way up, and then it comes down. And then it goes way up. And then it comes down. And then it’s going back up again. Right. Now. Now, the one thing that you’ll notice is, yes, it comes up and down, but at the same time, what is the trend line that we’re on? Right. And so, remember, these volatility, these peaks and valleys are getting smaller and smaller and smaller as the asset is getting bigger and bigger and bigger.
And it sort of looks like this the only time bitcoin has been down from the lows. So what we want to do is we want to look at the lows and the lows. We’ve only had lower lows a few times, and we can see them right here. So what does that mean? Yes, it’s volatile. I mean, it went from 69,000 all the way back down, 68, 65,000 all the way down to, whatever, about 16,000. And now it’s back up in the 60,000 range. But it went all the way to 16. Yes, but each time it sets that low, it’s a higher low.
All right, so that’s one way to look at that. Okay, so now that we sort of understand the past, we want to take a look at the future. And like I said, we’re going to look at this from three different methods. So you can get a good way to really kind of take a look at this. So the first way we want to look at that is something known as Metcalfe’s law. If you’re not familiar with Metcalf’s law, it’s basically network effects. And network effects are real, and they’re really powerful at the same time. So basically what this means is that the more nodes or the more people using a network, the more powerful, the more valuable it becomes.
So, for example, if you’re the only one in the world with a telephone, a telephone’s not worth a lot of money. As a matter of fact, back in, I think it was probably 94, 95, I got my first cell phone, and I was the first person that I knew that had a cell phone. And they were out before. I didn’t have one of those big bricks like they had in wall street in the eighties, but it was a phone, had a long antenna, probably longer than this pen right here. It was like a floppy antenna. And the phone at the time, it was only numbers.
So it wasn’t alphanumeric. That was a term back then. There was no letters. It was only numbers. And so I had this phone, but I didn’t really carry it with me anywhere. And the reason I didn’t really carry with me anywhere is because I had no one to call, because no one else had a phone. Now, I took it out. I was doing real estate at the time, so I take it on these job sites so I can call people, but I didn’t really carry it with me because it wasn’t worth a lot, because no one else I knew had one.
Now, the more people that have phones, the more powerful they become, the more useful they become. Right? And so we see this play out in many different areas. So, for example, social media, there’s alternatives to social media that are popping up right now. Some that I’m really liking, that are being built on noster, that are censorship resistant. And I think that’s the future. But it’s really hard to get people from, you know, Twitter, Instagram, Facebook, et cetera to get over to these platforms. Network effects are real. The more people that use a social media platform like Twitter, the more valuable that platform becomes.
So we’re going to look at that first. Now, this report right here, and this chart comes from Fidelity. Fidelity is one of the largest asset managers in the world, someone you should be paying attention to. They have been in bitcoin since, I believe, 2014. So they have viability, digital asset strategy, and they have this guy, Jurian Timmer. He is the head of global macro. I think he’s been there for 27 years. So head of global macro for 27 years at one of the largest financial institutions in the world, and specifically has been in the bitcoin and digital asset space since almost the beginning, since 2014.
All right, so when they talk, these are people that we should be paying attention to. So Julian timber says, in my view, the price of bitcoin is driven by the size and growth of its network. Metcalfe’s law, which in turn is driven by its scarcity, features stock to flow and real rates fed policy. So what he’s saying is that the real rates fed policy, as fed policy, is pushing the amount of money up, the scarcity of bitcoin is going down. And so it’s causing this effect. At the same time, we have the Metcash law, the network effects growing at the same time.
So all three of those, as the chart shows, this chart here, bitcoin’s network is growing in line with a standard power regression curve, a power regression curve which we have drawn on here. That means that the S curve nature of bitcoin’s network remains on track. If you don’t know what an S curve is, basically, it’s a way that we can measure adoption. We could use it for how fast phones were adopted, tvs were adopted, bitcoins adopted. We can also use it to measure how fast the COVID spread through the population. And so, basically, an S curve works like this.
And so what you do is you measure the time it takes to get to 10% adoption. So let’s say this is five years, or in bitcoin’s case, it’s ten years. And however it takes to get to 10% adoption is the same amount of time it would take to get to about 80% adoption, which is what we consider full adoption. So if it got here in ten years, then it should get here in ten more years, or about 20 years. If it got here in five, then we take five more years, etcetera. So that’s what he’s talking about here.
And if we look at this chart that we have right here that they’ve given us, we can see this regression line that’s drawn right here. And we can see, again how bitcoin gets overvalued. Undervalued. Overvalued. Undervalued. And what we have right here, these lines, if we can zoom in on that, is we have these fractals. So, this is what happened in 2017 at the top market, what happened at 2013 and 2011 at each of these tops. And basically, we’re saying, if it followed one of these patterns, this is where it’d be. And basically, what jury and Timmer and fidelity’s official number is by 2030, getting to $1 million per bitcoin using these models that make sense.
Okay, so $1 million. That’s fidelity’s approach using Metcalfe’s law. Now, there’s another way that we can look at this. And again, this is more of a venture capital way. And this is how I look at things in my fund that we have right now, the Bitcoin opportunity fund. And I’ve been doing for over ten years as a venture capital investor. And so it’s pretty simple what we would do. Let’s just say, hypothetically, that we’re in Silicon Valley. What was it? I don’t know. Ten years ago, 15 years ago. And I’m an investor, and you come and pitch me an idea, and you say, hey, Mark, I have this great idea, and I’m like, cool, what do you got? Well, I have an app that will allow you to call for a car to come pick you up and give you a ride.
And I’m like, cool. So you mean like a taxi? Oh, no, no, no. Not like a taxi. This is way better. You can get, like, a black car, and it’ll come get you. And it’s very easy. It’s frictionless. You just, you know, call it on the app. You hop in, you get out. Everything’s done. Okay, I guess that’s kind of cool. Maybe there’s some need for that. I don’t know. How much are you raising at what valuation? And you might say, well, I’m raising at $100 million valuation. I’m like, what? $100 million valuation? Where do you get that? And you say, well, it’s easy, Mark.
The taxi industry is this big, and the van industry is this big, and the limo industry is this big. And if I could get 5% market share from each one of those, which I think I could do more than, that will easily be worth more than $100 million. So, basically, what we’re doing is we’re trying to figure out how big the company can go based off of what markets it’s disrupting. We’re going to take some from taxi, take some from limos, et cetera. Back in the day, because I’m old, we used to take limos all the time.
We never take limos anymore. Now we just use Uber. One of my good friends owns. I actually have two friends that own limo companies and they’re both basically out of business today. One of them was one of the biggest limo companies in Vegas. And he said, limos are done in Vegas. Now everybody just uses Uber. So Uber stole that entire market share. And if we projected out how big that limo industry was, and we would calculate how much Uber got, we could see what that future valuation is. That makes sense. Okay, so now if we look at bitcoin in that light, what markets is it disrupting? Well, we certainly know that it’s disrupting the payment industry.
So we could look at how big PayPal is. Amazon pay, visa, of course, Apple pay stripe. Right? So we could look at all of these big payment companies and look at how big they are and go, well, okay, if it got 10% of that one and 5% of that one and 30% of that one, we could sort of calculate how big we think bitcoin could be worth, how much it could be worth based off disrupting these payment providers. However, the problem with that is that bitcoin is way bigger than just a way to send payments. Bitcoin is a lot more than that.
In my fund, we think that bitcoin is like a commodity. It’s like an asset that will have an entire industry built around it. Sort of like oil is a commodity or an asset, but there’s an entire oil industry. It’s the 8th largest industry in the world. Or gold is a commodity or asset. And there’s a gold industry. So measuring against just payment companies, I think is too small. So what should we measure it against? Well, bitcoin is not just competing against an individual company. Bitcoin is competing for value itself. So we know that bitcoin will become a lot of things.
But one thing we know today is it’s kind of one the store of value narrative. So we know people are parking their wealth in it. That’s why there’s bitcoin, ETF’s, et cetera. And so what we want to do is go, well, what are other things that people store their wealth in? Well, we know gold has been the best store of value for whatever, 5000 years. We know it’s worth about twelve or $13 trillion right now, today, we know Goldman Sachs, JPMorgan, et cetera, have all put out guidance saying they think bitcoin will overtake gold’s twelve or 13 trillion market cap.
So if it overtake that, well, that’s a twelve or 13 x from here. We know that people also store their wealth in cars, fine art, collectibles, things like that. That’s about a $6 trillion market cap. Fine art, $18 trillion market cap, stock market. So people park their money in stocks, right? Buying Apple, Tesla, Google, et cetera, things like that. The s and p 500, there’s about $115 trillion in the stock market. Real estate. So, obviously, people have a home that they live in. But then most people invest in real estate. They buy rental properties. Apartments is, you know, shopping centers, retail, etcetera.
There’s about 330 trillion in real estate. We know bonds, right? So people buy government bonds, treasuries, et cetera. 300 trillion there. And just in money, some people still store their wealth. Michael Saylor, there was a meme going around where he said, people that save their wealth in money, we have a word for that. We call them poor, but some people still save their money in money, in dollars, in fiat. It’s about 120 trillion there. So if we add that up, we’re at $900 trillion of just store value assets alone. And so then we’d say again, back in the venture cap way, if we get 5%, 10%.
So if we get 50% of gold, 5%, nothing crazy, just 5% of these, 5% of fine art, 15% of the stock market. Already, the younger generation is not investing in the stock market much. They’d rather buy bitcoin, 15% of real estate market, 30% of bonds, and 30% of money. If we can get that, that pushes bitcoin’s valuation to $200 trillion. 200. And if we divide that by the 21 million, that puts bitcoin at a $10 million price per bitcoin. Now, during Timur fidelity, they gave us sort of a target price, $1 million, and a timeframe by 2030.
This doesn’t really give us a timeframe, so we have to kind of figure that out on our own. How long would it take to capture this amount of each of those? I mean, I think that could happen in ten years. I think you can capture all of this in 50 years. That’s what I think. You may think I’m crazy, but that’s how I’m planning this out. Does that make sense? That’s how venture capitalists would look at it. Okay, there’s a third way that we want to look at this. And again, it also kind of uses some of what Jerry Timmer from Fidelity said.
Right. Which is the government, or I should say the Federal Reserve, the central bank’s policies, inflation policy. So we want to look at what is inflation doing to bitcoin now, inflation is pushing all asset prices up, right? So it’s not like homes are just getting more expensive. It’s that it takes more dollars to buy those homes because the value of those dollars have gone down. And so we want to look at how inflation could affect bitcoin. Now, you’ve seen me use this chart many times, and if you haven’t, then you should be paying attention, because this is something that I think is the key to understanding where asset prices go, which is why we’re putting it here.
Okay? This black line that we have right here is the S and P 500. So that’s sort of like the proxy for assets, right? So any financial advisor, your investment advisor, your 401K administrator, they’re gonna talk about the S and P 500 as the benchmark. And when we talk about investors or hedge funds making money, or what we call alpha, it’s what do we make on top of the benchmark over the S and P 500? So if the S and P 500 did 10% returns, and I was able to give you a 20% return, I gave you ten or 100% alpha.
I beat the market by 100%. Right. Okay, so the S and P 500 is this benchmark. The gold line is the global liquidity. Now, the global liquidity is basically all of the money and available credit in the world that could come into the market and push asset prices up. And what we can see is that global liquidity and the S and P 500 move almost exactly in lockstep. As a matter of fact, they’re correlated by over 90%. We can see there’s little areas of where they kind of break apart, but for the most part, they’re 90% correlated.
Now, this means a couple things. One, it means that global liquidity is driving asset prices. So if we watch global liquidity, we know where asset prices are going. But what it also tells us is that even though in your brokerage account, it looks like you’re making money, cool, look. Look how much made on the S and P 500 index. Look at my mutual funds, my 401 ks. Well, the problem is that you didn’t really, because it’s keeping up perfectly with the rate of debasement, or true inflation, as I like to call it, so remember, those dollars are losing value.
So the S and P 500 is keeping your head above water, but you’re not actually making money. Now, what we can do, if we map this out now, we’re looking at global liquidity in this blue line. And the white line is a basket of bitcoin and gold, two of what we call inflation hedges. And what we can see is that these move at about an 80% correlation, so less than the S and P 500. So you can see where they’ve become uncorrelated here. Now, what we know is that gold and bitcoin are more sensitive to the movements of the S and P 500.
So gold moves at about a 1.5 times sensitivity. Bitcoin is moving at a nine times sensitivity. So what does that mean? That means for every 10% increase in liquidity, gold goes up by about 15%. And for every 10% increase in liquidity, bitcoin goes up by about 90%. Makes sense. So now the only question we have to ask ourselves is how much will liquidity continue to increase? Because for every 10% it goes up, bitcoin goes up 90%. Well, the good thing is, is that the government actually projects this number out for us. Now, I believe they’re grossly understating it, but we can just take a look at their number.
So this is right here. This is from the Fed, the Fred chart of the m two, the global money supply. I use this quite often, so if you watch my videos, you’ve seen this. And so we can see the trend line of the growth of the money, the increase in liquidity. Now, this is just us. Liquidity, global liquidity is even way more. We don’t have time to go into that. If you want a whole other video on that, leave me a comment. Down below. We can see the trend line. And it goes steeper and steeper and steeper.
And now we’re all going up, almost straight up. Now, is this going to slow down, do you, what I would ask you, what do you think the probability is that the governments will print less money in the future, spend less money in the future? Probably very low, right? As a matter of fact, again, the CBO, Congressional Budget Office actually shows us this. So here we are about here right now. And this is what they’re projecting with the debt levels. They project the debt levels to go up into 2050. Now, this is the government saying this. All right, I think this is actually low.
I think it’s going to be higher than this. But this is what they’re projecting for the debt to do. And remember, for every 10% increase in liquidity, bitcoin goes up by 90%. And if we look at a chart from another way, we can see just since 2019 right here. So from 2019 until today or the end of last year, we can see that the us money supply and total debt is going up by about 10%, which again, pushes bitcoin up by 90%. This is the trajectory on. So if we continue down that path, where would bitcoin go? Well, again, we have even better charts.
Again, this is from the government, and we can see by 2050, or we can look at 2034 right here, they expect the public debt to be growing like this. So when you take this into light, which is why Jerry and Timmer from fidelity started including this, not just Metcalfe’s law, not just network effects, but also the scarcity of bitcoin, as well as the Federal Reserve policies, you can see how this is going to continue pushing bitcoin valuation higher and higher. Higher. Now, the next question you might ask yourself is, cool. Well, if it’s going to go up to a million dollars by 2030, or $10 million per bitcoin in ten years from now, what should I do? Well, let me give you a tidbit of information.
So I think a news article came out in the last couple days of Microsoft. Previous Microsoft CEO Ballmer. And Ballmer just became the 6th richest man in the world. Became richer than Bill Gates himself. So Bill Gates founded Microsoft. Ballmer was only the CEO there for, I think it was like 14 years. And he got a lot of stock when he was there. And he’s now surpassed Gates as becoming the richest guy or more rich than Gates, the 6th man in the world. Why? It’s because he held his stock while Bill Gates has been selling it and diversifying it.
So you hear about Bill Gates buying farmland and pushing vaccines all over the world, all these things, but Ballmer held his stock. So the way that Jeff Bezos became one of the richest guys in the world is because he started Amazon and held the stock for, whatever, 2025 years. He didn’t sell it, he didn’t trade it, he held it. It’s why Warren Buffet became one of the richest men in the world. He’s owned Coca Cola for 65 years, and he’s held his Berkshire Hathaway stock. And it’s why Ballmer just surpassed Bill Gates by holding the asset.
Holding the stock. The way to really build wealth is to hold bitcoin for the one year or the ten years of course, maybe you want to sell off a little bit along the way. Now I would advise there’s a much better way and I break it all down in this book. Retire off of bitcoin, the new rich playbook for tax free income on bitcoin. This is completely free, by the way. I wrote this. You can get it right here by scanning this, or we’ll link to it in the show notes down below if you want. Like I said, it’s a free download.
And I have some calculators in there where you can start to calculate out, based off of your assumptions, where you think bitcoin’s future valuation will be. Also in this I have Fidelity’s report linked in there, which I would highly recommend to read Fidelity’s report as well, if you care. Now, whether you think bitcoin is cool or not, whether you think my numbers are right or wrong, doesn’t really matter. You can use this framework for any other asset, whether this be a new angel investment, one of your friends has a venture capital investments, or buying copper or whatever.
Think about the future valuation, make a plan, and then you’ll have success. Let me know what you think about this. I’d love to hear your feedback. Leave me a comment down below. Of course, as always, give me a thumbs up if you like it. If you don’t, you can give me a thumbs down. Either way, let me know what you think. And oh, subscribe if you’re not already subscribed. And that’s what I got. All right, to your success. I’m out.
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